Use the Following Information to Answer the Question(s)below

question 17

Multiple Choice

Use the following information to answer the question(s) below.
Rearden Metal has earnings per share of $2.It has 10 million shares outstanding and is trading at $20 per share.Rearden Metal is thinking of buying Associated Steel,which has earnings per share of $1.25,4 million shares outstanding,and a price per share of $15.Rearden Metal will pay for Associated Steel by issuing new shares.There are no expected synergies from the transaction.
-If Rearden offers an exchange ratio such that,at current pre-announcement share prices for both firms,the offer represents a 20% premium to buy Associated Steel,then the price per share of the combined corporation after the merger will be closest to:

• A)$19.12.
• B)$20.00.
• C)$26.00.
• D)$17.20.

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Definitions:

Immune Systems

Complex networks of cells, tissues, organs, and the substances they produce that helps the body fight infections and other diseases.

Minor Infections

Infections that are usually mild, often easily treated or resolving on their own, such as a common cold or a minor wound infection.

Overprotected

Describes an individual, usually a child, who is guarded from potential risks or dangers to an extent that may limit their development or independence.

Bacteria

Microscopic, single-celled organisms that are abundant in most environments on Earth, serving various roles in ecosystems and human health.